German military study warns of peak oil crisis

A study by a German military think tank has analyzed how “peak oil” might change the global economy. The internal draft document — leaked on the Internet — shows for the first time how carefully the German government has considered a potential energy crisis.

The term “peak oil” is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis — and fear of it can trigger turbulence in commodity markets and on stock exchanges.

The issue is so politically explosive that it’s remarkable when an institution like the Bundeswehr, the German military, uses the term “peak oil” at all. But a military study currently circulating on the German blogosphere goes even further.

But what is remarkable is the source — and the bluntness of the report’s conclusions about political and economic impacts.

“The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles” is by “the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military”:

According to the German report, there is “some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later.”

This is what they expect for the 2020s and beyond:

Oil will determine power: The Bundeswehr Transformation Center writes that oil will become one decisive factor in determining the new landscape of international relations: “The relative importance of the oil-producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading powers.”

Increasing importance of oil exporters: For importers of oil more competition for resources will mean an increase in the number of nations competing for favor with oil-producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, “this could result in a more aggressive assertion of national interests on the part of the oil-producing nations.”

Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. “The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts,” the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. “Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the 1970s, will once again come to the fore.”

Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. “Shortages in the supply of vital goods could arise” as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. “In the medium term the global economic system and every market-oriented national economy would collapse.”

Relapse into planned economy: Since virtually all economic sectors rely heavily on oil, peak oil could lead to a “partial or complete failure of markets,” says the study. “A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis.”

Global chain reaction: “A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil,” says the study. “It is likely that a large number of states will not be in a position to make the necessary investments in time,” or with “sufficient magnitude.” If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it’s so tightly integrated into the global economy.

Crisis of political legitimacy: The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could perceive the upheaval triggered by peak oil “as a general systemic crisis.” This would create “room for ideological and extremist alternatives to existing forms of government.” Fragmentation of the affected population is likely and could “in extreme cases lead to open conflict.”

It would have been nice if there had been any reporting on how Germany might get itself off of oil, given how dire this report is.

Interestingly, the article notes:

The leak has parallels with recent reports from the UK. Only last week the Guardian newspaper reported that the British Department of Energy and Climate Change (DECC) is keeping documents secret which show the UK government is far more concerned about an impending supply crisis than it cares to admit.

According to the Guardian, the DECC, the Bank of England and the British Ministry of Defence are working alongside industry representatives to develop a crisis plan to deal with possible shortfalls in energy supply. Inquiries made by Britain’s so-called peak oil workshops to energy experts have been seen by SPIEGEL ONLINE.

Replacing oil in the transportation sector requires strong government action two decades before a peak because of the time needed to replace vehicles and fuel infrastructure. That was the conclusion of a major study funded by the Department of Energy in 2005 — yes, the Bush DOE — on “Peaking of World Oil Production.”

The DOE report noted: “The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.”

Ouch! The same central point is true about global warming. If we want global carbon dioxide emissions to peak and start declining, the planet will need to start aggressive mitigation policies two decades in advance.

Since the climate and clean energy bill has died in the U.S. Senate with no serious possibility of comprehensive legislation for at least the next two years and likely the next several, the best chance of the nation proactively developing a peak oil strategy is all but gone.

For that reason, the likely impacts of peak oil will continue to be a focus of Climate Progress.

Five years later and two presidents since the findings of the Hirsch report and we still lack any kind of policy towards energy.

In order to address climate change we need a comprehensive policy based on present energy availability to develop the technologies and overhaul our current infrastructure. When we hit the wall under the next oil shock it will be far too late then to agree to do much of anything on climate while nations scramble for their piece of the remaining liquid carbon reserves.

No offense to the Japanese but this is equivalent of getting a 15+ year lead to the invasion of Peril Harbor and blindly continuing to “whistle Dixie.”

Surely the US has a similar study? Oh, they do, “Bush, 2005, DOE.” Gosh, do you think that the BIG MONEY interests have anything to do with keeping the lid on that report and thus enabling them to continue to take billions of dollars a day out of the economy and salt a big bunch of that away in tax free “Swiss” bank accounts? I recall reading EXXON recently paid NO tax on ~$45 Billion profits. (Perhaps that is just left wing propaganda though.)

All in all, it does not tax the gray matter that much to conclude that a good strategy would be to invest in sustainability post haste.

Note to Tea Baggers: Are you paying attention here? Billions of dollars a day could be reinvested on our shores easing the transition, as opposed to making fat cats fatter on your dime. You folks complain about Wall Street getting your support when all the while you not only turn a blind eye but actually help a far bigger rip off. Wake up and fight the real enemy. Corporate and Capitalistic greed, rape, and pillage.

The big question is whether we will have a climate law before peak oil hits. After oil prices go way up, it will be much harder to pass a law limiting co2 emissions. Instead, there will be pressure to produce more oil from tar sands and liquid coal to deal with high prices, despite the effect on climate.

It’s clear that all governments know about Peak Oil but also that none really know how to explain it to the rest of the populace. It creates appallingly difficult policy dilemmas – e.g. in a depletion scenario, is petrol/diesel rationed in terms of amount available per person per week or, letting the good ol’ Market run the show, by price? I prefer the former, and I’d hope that you’d all have expected that, and have downgraded my liquid fuels usage in terms of transport – drive less, buy fresh & local & grow your own. What bothers me is all those who haven’t made such choices, whether Tea-Baggers or folk who just ain’t thought about it.

But Peak Oil and Climate Destabilisation have the same solution. Revalue what is important and Transition away from the poisoned chalice that is the Fossil Fuels addiction situation we have gotten stuck into. Either we do that or we are heading back to the Dark Ages, and given Mankind’s accomplishments, that seems a waste on an extraordinary scale.

Having followed this topic for most of this decade, several points of the German report really stood out for me:

– The report was leaked before higher level officials could dumb it down (i.e. make it less scary), supposedly this is the report after the scientists were finished with it but before the bureaucrats started mucking with it.

– It projects 2010 as the year of top level of crude production.

– The effects its forecasting are dire (not just not nice, like a recession…).

– The report was meant to stay secret and not to see the light of day in the public sphere (ever).

The US government had a 3rd party create a report regarding peak oil (the Hirsch report which Bush Administration removed it from the DOE website shortly after it was posted, but its back – that is way worth your read if you haven’t), which it promptly ignored of course:

The German forecast is showing even more dire consequences than the Hirsch report, basically looking at economic destruction of the current world system and many sovereign states in the process. Hopefully it doesn’t roll out that bad i.e. so quickly economies can’t adapt (file that in the same barrel with the hope that global warming doesn’t roll out like we’ve been forecast & seeing as well).

This makes me think of a couple of things:

1. This is really setting itself up as the first of a one two punch along with climate change to threaten the existence of most countries in the world over the coming century. Peak oil will seriously push coal to liquids use (i.e. push us further into CO2 overload).

2. The governments aren’t going to tell us as we go over any of these cliffs (they aren’t even trying with regards to oil and we’re right at the cliff – and they know it as this leak, the UK leak and the Hirsch report show), whether its oil or climate change. Presumably its just much easier to leave things as they are and let us go over the cliff and plead stupidity (which would be valid). A colossal and systemic failure of Governments all over the world to handle this issue (peak oil) is astonishing, quite frankly (not a single one is saying this is an emergency at this point) – since it represents such a clear and present danger to the mid term existence of so many countries.

3. Who thinks our chances at tackling climate change is going to get better as the effects of peak oil start landing, with oil’s price skyrocketing and vacuum cleaning all the disposable income out of our economies (and grinding them down). The temptation/urge to use all the cheap easy transportable energy sources (i.e. natural gas & coal) for power generation & most importantly conversion to liquids (coal to diesel) will be unbelievable.

I’d like to paint some good angle on this, but other than confirmation of what alot of people have been suspecting with regards to peak oil and the victory in the truth (the warning) seeping out here a little this seems like severely bad news. This is a wake up call folks – the governments are going to ignore this issue until the dire consequences are upon us and the consequences are going to start soon (as long as oil consumption stays flat or climbs) – our economies are going to get raped. Get yourself as ready for $4+ a gallon gasoline (and $5 & $6 and onward) as you can ASAP (like over the next year or so – less is better).

Climate Progress has indeed paid more attention to peak oil than most. I detect some movement from a previous overconfidence that green energy will bail us out, toward a more circumspect wait-and-see attitude.

We need yet more attention to looming oil shortages, already beginning to bite. Green energy infrastructure, as presently produced and maintained, is utterly dependent on fossil fuel, especially oil. Energy is the heart and driver of all economics and civilization. Work it out for yourself! Consequences will be profound, though as yet unknown in detail.

Interested folks should spend some time on The Oil Drum, which publishes and links to quite a variety of views.

Over here in the UK we have an economy that runs on higher gas prices through taxation. Currently we pay ~1.20 GBP/litre, which is about $1.85. Times that by 4.5 to get a UK gallon and you will see that we can plod along with gas prices over $8. I’ve always maintained that America is incredibly vulnerable to Peak Oil because it runs on a la-la land low gas price economy, and has designed its infrastructure the same way. Here I can walk to the stores and to the veg garden and can obtain local meat etc.

A lot of people here though fell for the periodic “big shop” mirage years ago…..

I posted a link to the original Der Speigel article on an economics blog looking for opinion and was told to

“take studies by military think-tanks with a pinch of salt. Defence budgets in all western countries are coming under scrutiny and review. Eisenhower’s ‘military-industrial complex’ hasn’t gone away; it’s just mutated.”

It appears that, what with both peak oil and climate change, our transportation will need to be largely off oil within two decades or less. But if plug-in vehicles penetrate the new-car market even ten times as fast (22% after ten years) as hybrids have, the proportion of plug-ins in the worldwide fleet — because vehicles last for over 15 years — will not even become significant until 2030. Crushing and replacing vehicles early, though effective for the worst, is not an answer, as new production (from recycled materials) now adds 15% to the lifetime energy consumption of each vehicle. As vehicles become more efficient, this proportion becomes higher, up to an 80% addition to an efficient BEV’s lifetime fuel consumption.

What we will need to do instead is convert existing ICE vehicles into PHEVs, EREVs, and BEVs, as best fits the owner’s needs. With mass produced kits for the most popular larger gas guzzling vehicles (like pickup trucks on up), this can be done while actually reducing overall continued cost of ownership for many of these vehicles, even before anticipating future fuel price increases, volatility, and disruptions — all of which will eventually increase demand for such conversions. In the meantime, incentives for safety- and emissions-certified conversions matching those for the purchase of new plug-in vehicles would be extremely valuable to get mass deployment of this technology moving and thus potentially accelerate the electrification of ground transportation by at least a decade (significant oil consumption reductions by 2020 instead of 2030).

With many, many vehicular Li-ion battery factories coming on line soon due to recent huge investments, some from the U.S. stimulus bill, and plug-in vehicles arriving more slowly, a battery glut is now expected in 2-3 years. While it takes many years to design and further ramp up the production of new plug-in vehicles, conversion kits can be designed and built fast enough to match the ramp-up of battery manufacturing capacity; and, after training, they can be installed by recession-plagued auto dealers and repair shops.

Followed closely by $150 oil. Then by $60 oil. Then by $200 oil. Then by $70 oil. Then by $300 oil… etc.

This is the problem of peak oil. Not that the price is going to be high or low. It’s going to be unstable. If you are a large corporation whose business requires a great deal of transportation this injects a huge amount of instability into your business. Wall Street does NOT like instability.

I noted without much surprise that the one thing that seemed to be the tipping-point towards recession was the $120+ oil spike in 2008. Sure, there were some pretty big and patently unsustainable financial bubbles out there, but bubbles pop quicker if you stick a pin in them. So – was this the first Peak Oil Recession?

If so, then a pattern of sorts should emerge in coming years. We hit the dip, climb out of it, oil demand picks up, production fails to meet demand, the price surges and back down we go. Not a double-dip as such – more like a repeater-version, an endless series of “W”s, with the trend, like that of Arctic sea-ice, inexorably downwards.

Any country that manages to invent its way out of this via a combination of innovation, investment and changes in individual expectations/behaviour will find itself way ahead of the game in a matter of years.

If you want to get Americans interested in renewable energy, this is the issue to focus on. It doesn’t matter that climate change may be an even more compelling reason to curtail our use of oil, if Americans really understood that they send the equivalent of a ‘stimulus package’ overseas every year just in oil imports, they are more likely to respond to pleas to reduce consumption and change the sources from which their energy derives. Taxing oil keeps the money in the US where it can be used to build renewable energy infrastructure, which in turn keeps more money in the US and provides American jobs. Joe, just because you and your readers understand the calamity that climate change will wreak on Americans and everyone else on the planet, doesn’t mean that it is the issue with which you can get the American people to change.

Ron, with all due respect: “What we will need to do instead is convert existing ICE vehicles into PHEVs, EREVs, and BEVs, as best fits the owner’s needs. With mass produced kits for the most popular larger gas guzzling vehicles …”

I think that “what we will need” is less private transport (but more walking and cycling) and a lot more public transport by bus and train. The fixation on private motorised transport has to end and the sooner that becomes a prevailing view rather than trying to keep all the stuff running in its current fashion the better. If it’s oil based we have PO and climate issues, if it’s electric then unless extra renewables are installed to offset that growth in demand it will just use up those same fossil supplies instead. No free lunches.

Here in Europe we pay the equivalent of $5-8/US gallon for fuel, and have been doing so for many years. But we can also choose from a large number (>15) of very fuel efficient clean diesel cars that get better than 40 MPG (US gallons)in mixed driving. There are at least 10 models that get over 58 MPG (again, US gallons) on the highway. Folks, this really is what the US should prepare for ASAP.

“If you want to get Americans interested in renewable energy, this is the issue to focus on. It doesn’t matter that climate change may be an even more compelling reason to curtail our use of oil, if Americans really understood that they send the equivalent of a ’stimulus package’ overseas every year just in oil imports, they are more likely to respond to pleas to reduce consumption and change the sources from which their energy derives.”

Americans don’t like being told there are limits – look how they replaced Carter with Mr. “Mourning in America.” They are more likely to scream “drill baby drill” than switch to bicycles.

Here is another opportunity to address the communication problem scientists continue to mention.

— Abiotic Oil is a pet “science fact” regularly preached by denier and radio talk show host George Noory on his nightly, nationally-syndicated “Coast to Coast AM” program. It’s an unsteady audience but a large one that tries to listen most nights.

With the exception of Bell, you will need to remember that you are heading beyond the frontier’s edge where conspiracy, paranoia, revised history and pseudo science are religion. The trail of ignorance starts here and sometimes makes a beeline into the mainstream “news.”

The inhabitants of the C2C tabernacle will never come here. You will have to become missionaries unto them in one way or another. If you do choose to go among them, take a good sense of humor, a flashlight and bag of bread crumbs.

This might be the best time for you — the experts — to strike. When Noory took over the show seven years ago, I and many like minds — including scientists, lawyers and engineers — created a live, online fact-checking project. It was so effective that Noory made several threats to sue. But in the end the effort seems to have helped educate Noory. He may be ready to listen to you.

Living in the global warming era, and now entering the peak oil era, I’m surprised that there isn’t more discussion about the use of hemp as a biofuel, as well as its use as an industrial crop. It’s no secret that in 1941 Henry Ford built a car made from hemp and wheat straw that was powered by hemp biofuel. Anyone that understands the history of industrial hemp in America knows that a combination of the greed of William Randolph Hearst and the petrochemical industry ultimately squashed what was destined to be a revolutionary industry.

Often associated with marijuana, hemp has been wrongfully lumped in with the cannabis family, and this is perhaps one of the biggest reasons it remains off the table as an industrial crop. The hemp plant itself is not a drug from which one can get high, it is one of the oldest plants known to mankind, can grow it in almost any climate, and has over 25,000 known uses – biofuels among them.

I have written a blog containing some excerpts from an article by John Fanning further exploring hemp’s potential. To read it follow this link http://normandpost.com/?p=214

Recent efforts to reduce the carbon content in fuels and to improve their energy efficiency can certainly help to reduce the amount of CO2 released into the atmosphere. However, large-scale carbon sequestration will definitely be required to achieve the U.S. national goal of reducing green house gas emissions from 1530 million tons of carbon equivalent (tce) in 2002 to 1255 million tce in 2012.

Coal-to-gas is a way of making a synthetic crude, but nowhere near satisfying the rate at which regular crude is consumed, and at nowhere near the cost. All syncrude sources are heavily rate-constrained. You are looking at it replacing at best a few percent of our current consumption, and at a much higher pump price. The U.S. economy will have to gear-change radically to be able to function under that regime – “It’s an economy, Jim, but not as we know it”, Mr Spock would comment.

John,
Thanks for the reply.
I’d say if oil ever ran out, a vehicle would be developed that burned some form of coal directly – without a lot of costly refining. There is a lot, a lot of unmined coal left, so we could satisfy the world’s energy needs with no problem. Comparing the imaginative things that have been done in the last few years with cars (the Prius, for example) the engineering for this “coal car” would be easy.